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Metals and Manufacturing

The new OPEC: Who will supply the lithium needed to run the future’s electric cars? – by Justina Crabtree (CNBC.com – December 30, 2016)

http://www.cnbc.com/

The automotive industry’s focus on electrification has accelerated in 2016. Volkswagen Chairman Herbert Deiss told CNBC at the Paris Motor Show in November that “electric mobility will take off by 2020,” while Tesla CEO Elon Musk announced in May his aim for annual production to be at 1 million vehicles by this same year.

The onus is now on rechargeable batteries – rather than petrol – to propel the automotive industry into its proposed greener future, with lithium ion cells being the prevailing form of this technology.

“Lithium is a pretty abundant element naturally,” Jamie Speirs, a fellow in energy analysis and policy at Imperial College London, told CNBC via telephone. But, though worldwide production of the metal is increasing year on year, he detailed that “the current supply chain will not match up with lithium demand by, say, 2040.”

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No cobalt, no Tesla? – by Sebastien Gandon (Tech Crunch.com – January 1, 2016)

https://techcrunch.com/

The battery industry currently uses 42 percent of global cobalt production, a critical metal for Lithium-ion cells. The remaining 58 percent is used in diverse industrial and military applications (super alloys, catalysts, magnets, pigments…) that rely exclusively on the material.

Approximately 97 percent of the world’s supply of cobalt comes as a by-product of nickel or copper (mostly out of Africa). Freeport-McMoRan Inc. and Lundin agreed to sell to Chinese players their respective stakes in the Tenke Fungurume mine, one of the largest known cobalt sources, in the Democratic Republic of the Congo.

Tesla has stated that the cobalt it needs will be sourced exclusively in North America, but the math doesn’t seem to add up. Is Tesla doomed? Not necessarily…

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Tech companies pledge to keep kids out of the cobalt mines that power your smartphone – by Peter Whoriskey and Todd C. FRankel (Toronto Star – December 22, 2016)

https://www.thestar.com/

WASHINGTON POST – Separate groups of the world’s leading technology companies are launching two initiatives to curb “the worst forms of child labour” and other abusive practices in the supply chain for cobalt, a key ingredient in lithium-ion batteries that power smartphones, laptops and electric cars.

About 60 per cent of the world’s cobalt originates in the Congo, where hand-dug mines rife with dangers attract legions of poorly-equipped, “artisanal” miners who work for as little as $2 a day

Apple, HP, Samsung SDI, and Sony have joined an effort, known as the Responsible Cobalt Initiative. It is being led by a Chinese business group, the Chinese Chamber of Commerce for Metals, Minerals & Chemicals, and supported by the Organisation for Economic Cooperation and Development (OECD), according to the group.

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Stampede to invest in lithium mines threatens price gains – by Eric Onstad (Reuters U.S. – December 15, 2016)

http://www.reuters.com/

LONDON – A rush to invest in new and expanded mines for lithium, a key ingredient in batteries used in electric cars, means material will flood the market just as fresh demand kicks in, potentially curbing price gains.

While demand for lithium batteries is due to soar, the market is on course for a global surplus next year or 2018 as miners gear up to expand output – overwhelming demand for the commodity by electric automakers such as Tesla Motors Inc. (TSLA.O).

It’s not a new phenomenon. Other commodities have seen similar excitement about the future, such as uranium and rare earths. Investors chased bullish scenarios only to be disappointed when prices crashed due to excess supply or less than expected demand.

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Zinc Rally Driven by Demand for Better Cars in China and India – by Biman Mukherji (Wall Street Journal – December 14, 2016)

http://www.wsj.com/

Prices for base metal are up 70% this year

NEW DELHI—In a stellar year for commodities, one base metal—zinc—has stood out from the pack, with prices rising more than 70%. Thanks to greater demand for higher-quality cars in big developing markets like India and China, many investors believe this rally won’t be just a flash in the pan.

Zinc’s surge had already been aided by the closure of several mines world-wide during a previous price slump, which restricted supply of the base metal. Now, with consumers in India and China buying more cars that use rustproof galvanized steel—which is made using zinc—analysts believe demand could continue to outstrip supply.

“The rise in zinc and coal has certainly brought back investor optimism,” said Steve Hulton, research director at Metals & Mining Fundamentals in Sydney. “Given zinc’s comparatively tighter fundamentals among base metals, we do expect zinc prices to continue to outperform.”

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Mexico Overtakes Canada as No. 2 U.S. Exporter Ahead of Trump – by Greg Quinn and Nacha Cattan (Bloomberg News – December 6, 2016)

https://www.bloomberg.com/

Mexico is overtaking Canada as the No. 2 exporter of goods to the U.S. this year, in a sign of how economic ties have deepened between the two countries even as the relationship is being questioned by President-elect Donald Trump.

Shipments from Mexico totaled $245 billion in the first 10 months of the year, according to Commerce Department figures released Tuesday, ahead of Canada’s $230 billion. If the trend continues, it would be the first time ever the U.S. bought more imports from its neighbor to the south. The two countries ended 2015 tied in exports to the U.S.

The trend of catching up to Canada puts China and Mexico as the top two exporters to the U.S. just as Trump prepares to take office in January, reflecting the strong pull of lower cost jurisdictions for the U.S. economy. Canada, which has one of the highest cost bases in the Americas, has seen its share of U.S. imports fall to about 13 percent from around 20 percent two decades ago.

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Glencore sees nickel shortage as electric vehicle demand burgeons – by Martin Creamer (MiningWeekly.com – December 2, 2016)

http://www.miningweekly.com/

JOHANNESBURG (miningweekly.com) – Diversified mining and marketing company Glencore sees a shortage in nickel arising as a result of burgeoning demand from electric vehicle (EV) production.

Batteries used in EVs are consuming about 100 000 t of nickel demand and if 10% of the world’s vehicle fleet transitions to electric power, 400 000 t of nickel would be required on current yearly production of 1.95-million tonnes.

“We see a shortage in nickel,” Glencore CEO Ivan Glasenberg said in response to BNP Paribas analyst Sylvain Brunet during a conference call in which Creamer Media’s Mining Weekly Online took part.

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The hot commodities with leverage to the electric vehicles boom – by Peter Klinger (Australian Financial Review – November 15, 2016)

http://www.afr.com/

It was a question out of left field at Tesla Motors’ shareholder meeting in California in May 2016. “Will you be able to source enough lithium to achieve your ambitious electric vehicle growth targets?” a shareholder asked Tesla’s billionaire boss, Elon Musk.

The query summed up the reason so much of Australia’s mining sector is enjoying an extraordinary lithium boom that could wash over into sections of the graphite world.

And as much as Musk tried to hose down concerns his global ambitions could face headwinds because of a slower-than-expected supply-side response to lithium and other commodities, it’s the sort of question the plethora of ASX-listed hopefuls are lapping up with glee.

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Trudeau Liberals set to join Wynne Liberals in helping rich people buy electric cars – by Lorrie Goldstein (Toronto Sun – October 22, 2016)

http://www.torontosun.com/

What is it with our governments and public subsidies for electric vehicles? Federal Climate Change Minister Catherine McKenna told The Canadian Press this month the Trudeau government is working on “creating incentives” for Canadians to buy electric vehicles. This as part of its overall climate change strategy, in addition to imposing a national carbon price on the provinces.

In other words, the Justin Trudeau Liberals in Ottawa will follow the Kathleen Wynne Liberals in Ontario in throwing more public money at one of the most expensive and least efficient ways of reducing industrial greenhouse gas emissions linked to climate change.

In Ontario, the Wynne government is giving public subsidies of up to $14,000 for electric vehicles, plus $1,000 for installing a home charging station. Plus four years of free electricity for overnight charging.

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Why Electric Cars Excite the World’s Biggest Mining Company – by Chisaki Watanabe (Bloomberg News – November 1, 2016)

http://www.bloomberg.com/

BHP Billiton Ltd., the world’s biggest miner, is hot for electric vehicles. The Melbourne-based resources giant, which mines metals and coal used for both steelmaking and fueling power plants, is increasingly optimistic that there’ll be a surge in demand for some of its products as consumers opt for electric vehicles, or EVs, and other renewable energy technologies.

“As you see more renewables and EVs, we also will see an impact on copper demand,” Fiona Wild, BHP’s vice president, sustainability and climate change, said Tuesday at a conference in Shanghai hosted by Bloomberg New Energy Finance.

“EVs at the moment have about 80 kilograms of copper in them. As they become more efficient, you see a greater amount of copper in those vehicles, so there’s always upside for copper.”

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China aluminum makers to target auto, aerospace in global push – by Melanie Burton (Reuters U.S. – October 17, 2016)

http://www.reuters.com/

China’s giant aluminum makers are pushing into the global automotive and aerospace markets, with industry sources expecting their presence to heat up competition and possibly spark a buying spree for Western metals companies.

China’s top aluminum companies are venturing into the more lucrative parts of the global value chain, on course to seize market share from the likes of Alcoa and Constellium, as they look to buy into foreign firms to boost their technical know-how and expand their reach.

The chief executive of Novelis Inc [NVLX.UL], the world’s largest maker of rolled aluminum products, said last week he expected competition with Chinese producers to be “very fierce” over the next five to 10 years in the high-value-added sectors of aerospace and engineering – which so far have been dominated by European and U.S. manufacturers.

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Samsung’s woes highlight explosive limits of lithium batteries – by Jeremy Wagstaff (Reuters U.S. – October 12, 2016)

http://www.reuters.com/

Lithium-based batteries have been powering our portable devices for 25 years. But consumer demand for smaller, longer lasting devices is forcing manufacturers to push the technology, battery experts say, testing the limits of how much energy they can safely pack into smaller spaces.

“A battery is really a bomb that releases its energy in a controlled way,” says Qichao Hu, a former researcher at Massachusetts Institute of Technology and founder of SolidEnergy Systems, a battery startup.

“There are fundamental safety issues to all batteries, and as you get to higher energy density and faster charge, the barrier to explosion is less and less.” On Tuesday, Samsung Electronics scrapped its flagship Note 7 smartphone and told customers return their devices after weeks of bruising reports of phones igniting and images of scorched handsets.

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Coal Miner’s CEO Calls Tesla a ‘Fraud’ and Elon Musk Tweets It – by Jonathan Crawford (Bloomberg News – October 10, 2016)

http://www.bloomberg.com/

The head of the biggest privately owned U.S. coal producer on Monday called electric-car maker Tesla Motors Inc. a “fraud” for failing to turn a profit despite subsidies. Elon Musk, the billionaire chief executive officer of Tesla, fired back at Murray Energy Corp. CEO Robert Murray within hours on Twitter.

In his post, Musk said Tesla gets “pennies” on the dollar in subsidies compared with the coal industry, and that climate science denial is the “real fraud.”

The verbal sparring between Murray and Musk comes as seismic changes in energy policy and competition from natural gas have pummeled coal miners, leading to bankruptcies and record production cuts. Meanwhile, the presidential election has underscored differences between Republicans and Democrats in their approaches to federal energy regulations and spending.

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Electric car revolution brightens outlook for a medley of metals – by Jan Harvey (Reuters U.S. – October 5, 2016)

http://www.reuters.com/

LONDON – Electric cars such as the Nissan Leaf may look no different from the standard family runaround. But the new materials that go into them could revolutionize the market for metals used in the industry, opening up a new field for commodities investors.

“We identified electric vehicles as an area where we are at an inflection point for demand,” said Duncan Goodwin, portfolio manager of the Baring Global Resources Fund.

Around 12 percent of the fund’s $378.2 million in assets is exposed to materials that are used in electric vehicles. It has investments in New York-listed Albemarle and Australia’s Orocobre, two companies producing lithium, a key element in electric car batteries. Shares in both companies have risen sharply this year.

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The Lithium CEO betting Tesla won’t exist in 10 years – by Tess Ingram (Australian Financial Review – September 7, 2016)

http://www.afr.com/

Lithium hopeful Dakota Minerals’ acquisition of a tenement package in Portugal was in part driven by a surprising idea – chief executive David Frances believes Tesla Motors will not exist in a decade.

Mr Frances said when Dakota, a Perth-based lithium explorer, was weighing up where to make a project acquisition, it was not wooed by the demand prospects of North America, unlike many of the mining companies rushing to peg ground close to the US-based car manufacturer’s Nevada lithium ion battery “gigafactory”.

“The only thing I could see was lots of gas at $2 a gallon and lots of guys driving around in V8 monster trucks and it is hard to see these guys are going to drive Tesla’s,” he said. “There are probably niche markets but predominantly I don’t think the US is going to be the early adopter of electric vehicles.”

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